DG has been falling recently, and appears to be oversold based on RSI. Additionally, the price ratio of DG to DLTR has now approached levels only seen briefly last winter - after a very short and sharp decline - and before that, not since 2020.

All true. But, in a broader context DG might not be quite as enticing.

Many stock prices have fallen (some a lot) over the last year, which doesn't mean
a lot of bargains are to be had as many stocks were richly priced to begin with.
I suggest that this was the case for DG and DLTR.

Both stocks are still trading in the upper reaches of their P/E range.
It looks as if, on an historical metrics basis, DG is roughly fairly valued
and DLTR is overvalued. Comparing a stock at fair value to an
overvalued one and concluding that the fairly valued stock is therefore
attractive might be a little misleading; a case of relative value.

For what it's worth Morningstar considers DLTR to be moderately overvalued
and DG to be approximately at fair value. I think this is probably roughly right.